LONDON (Reuters) – The European Central Bank cut interest rates for the seventh time in a year on Thursday, looking to prop up an already struggling euro zone economy that will take a large hit from U.S. tariffs.
Following are highlights of ECB President Christine Lagarde’s comments at a news conference after the policy meeting.
TARIFF EFFECT
“We know that it’s a negative demand shock. We can anticipate that it will have some impact on growth, but the net impact on inflation will only become clearer over the course of time.”
‘UNANIMOUS DECISION’
“I can confirm to you that the decision to cut rates by 25 basis points was a unanimous decision.
“Options were debated, but there was no one to argue in favour of a 50 basis points cut, for instance, so 25 basis points was definitely the rate cut on which all in the room agreed.”
TRADE DISRUPTIONS
“Increasing global trade disruptions are adding more uncertainty to the outlook for euro area inflation. Falling global energy prices and appreciation of the euro could put further downward pressure on inflation. This could be reinforced by lower demand for euro area exports owing to higher tariff and a rerouting of exports into the euro area from countries with overcapacity.”
GLOBAL TRADE TENSIONS
“Downside risks to economic growth have increased. The major escalation in global trade tensions and associated uncertainties will likely lower euro area growth by dampening exports, and it may drive down investment and consumption.
“Deteriorating financial market sentiment could lead to tighter financing conditions increase risk aversion and make firms and households less willing to invest and consume.”
DEFENCE BOOST
“The increase in defence and infrastructure spending would add to growth.”
URGENT FISCAL POLICIES
“In the current political environment. It is even more urgent for fiscal and structural policies to make the euro area economy more productive, competitive and resilient.”
‘EXCEPTIONAL UNCERTAINTY’
“The economic outlook is clouded by exceptional uncertainty.”
(Reporting by Reuters Global News Desk)
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